Bayer to force India patients to pay monopolistic prices for its drugs

What does virtually every multinational corporation adore? Answer: A monopoly on its products. Less or no competition, you see, means higher profits and without regard to consumers’ pocketbooks.

That might be one reason to explain why German Big Pharma corporation Bayer has said it will challenge a decision by Indian officials to allow production of a cheaper generic copy of its patented cancer drug.

The decision came after India last year agreed to allow Natco Pharma to produce the drug Nexavar. On March 4, the Indian patent appeal’s office rejected Bayer’s bid to overturn that ruling, to which the company said it “strongly” disagreed and would appeal to the high court in Mumbai.

Research is expensive, but theft or counterfeiting is worse

The BBC reported that Bayer sells the drug for 280,000 rupees ($5,118) for a 120-tablet pack – expensive, by any estimation.

“Bayer is committed to protecting its patents for Nexavar and will rigorously continue to defend our intellectual property rights within the Indian legal system,” the company said in a statement, which was quoted by The Associated Press.

And while acknowledging that research and development is both necessary and expensive, health groups have nonetheless applauded the Indian decision because they know that if allowed to stand, it will lead to more affordable versions of previously patented medications.

A d v e r t i s e m e n t

“The decision means that the way has been paved for compulsory licenses to be issued on other drugs, now patented in India[2] and priced out of affordable reach, to be produced by generic companies and sold at a fraction of the price,” said Leena Menghaney, of the medical charity Medecins Sans Frontieres, according to BBC.

The Nexavar case is the first one in India where a company has been granted a “compulsory license” to manufacture a patented drug. Under the ruling, Natco must pay seven percent of its royalties to Bayer[3] as compensation.

The decision comes as the pharmaceutical industry is exploding in India, a burgeoning nation of more than 1.2 billion people, many of which still live in abject poverty. The industry there is worth $12 billion annually and is expected to grow four-fold over the next 10 years.

But the country also has a serious problem; it is increasingly inundated with phony medications.

Phony drugs a bigger problem than cheaper alternatives for real drugs

Writing in The Wall Street Journal in May 2010, Roger Bate, a senior fellow at the American Enterprise Institute, said Indian authorities were cracking down on phony pharmaceuticals but that the problem was daunting: During a series of raids, agents with India’s Food and Drug Administration of the Indian State of Uttar Pradesh uncovered large quantities of substandard medicines which resulted in several arrests:

This evidence of India’s fake drug[4] trade jibes with what I’ve found in several surveys. In 2009, I looked at five important medicines being sold at 52 different pharmacies in Delhi and Chennai, using covert shoppers. In Dehli, 12 percent of the pills were substandard, as were five percent in Chennai. About two percent of the pills contained no active ingredient. The others did but it had degraded, probably because the pills had expired and been repackaged with new labels; some may have degraded through poor storage.

Because of the enormity of the country and its population, coupled with far less regulatory oversight than here in the U.S., estimates of just how big the problem really is vary wildly. The BBC reported that up to a quarter of the medicines “consumed in poor countries could be counterfeit or substandard, according to the World Health Organization.”

It’s big business. Counterfeit drugs – in which no royalties are paid to patent-holders, by the way, amount to about $200 billion annually worldwide. What’s more, “producers need very little inventory to set up the manufacturing process and can make huge profits.”

This problem is especially worrisome to Indian officials.

“With manufacturing costs nearly 40 percent cheaper than other countries, the authorities are worried India could become an easy target for counterfeiters,” said BBC.